Liquid gold - The markets may be in meltdown, but fine wine remains a tasty long-term investment. Tim Atkin on the bottles to bank on

[Matthias R WHT]

Is now a good time to invest in wine? As the credit crunch continues
to squeeze our spare cash, the question might sound faintly silly -
like worrying about your toenails when your leg's about to be
amputated - but I mean it seriously. It's hard to open the financial
pages without reading about the profits to be made from wine.

'Wine investments are offering a more reliable return than FTSE-100
shares,' claimed one magazine recently. A cynic might say that leaving
your money under the bed would offer a better return at the moment,
but there's some truth to that statement. You'd be mad to invest money
in commodities, shares or property, but if you choose the right wines
you might make a handy profit.

I say might, because there are signs that the market is beginning to
plateau. Investment journalist John Stimpfig says, 'There is a
question mark over how long wine can remain immune from what's going
on in the financial markets.' My guess is that a redundant, wine-
loving Lehman Brothers trader would rather sell off a dozen cases of
2000 Château Lafite than lose his house. The situation is currently
very volatile. Despite what wine merchants and fine wine fund managers
might say, no one knows what will happen to prices over the next
year.

What is more certain is that, over time, fine wine generally shows a
return of around 12% per annum, although some bottles do much better
than that. If you'd bought the 1982 Château Pétrus in 1983 it would
have cost you £300 a case. It is currently worth around £32,000. How
do you know which châteaux to follow? Well, in investment terms, the
definition of fine wine is very narrow. For a list of the top 100
properties, nearly 95% of them from Bordeaux, have a look at www.liv-ex.com,
which tracks these things on a daily basis.

If you're thinking of putting some money into wine, follow 10 simple
rules: 1. Buy the best Bordeaux (the First Growths, the Super Seconds
and the top St Emilions and Pomerols) from the best vintages. 2.
Always deal with a reputable wine merchant or broker (have a look at
www.investdrinks.org for a list of companies to avoid). 3. Compare
prices before you buy. 4. Consider the services of a regulated wine
investment fund, such as the Vintage Wine Fund
(www.vintagewinefund.com), Wine Asset Managers (www.wamllp.com) or
Magnum Fine Wines (www.magnum.co.uk). 5. Buy your wine as early as
possible, preferably en primeur. 6. Leave it in bond, so that you
don't pay duty or VAT. 7. Use a professional storage company. 8. Be
aware that you are taking a risk. 9. Buy the wines that the powerful
American critic Robert Parker likes. 10. Remember that you can always
drink your investment.

My tenth point may be the most important. Over the years, I've bought
and sold a few cases (usually too early or too late), but I
fundamentally believe that wine is meant to be consumed, not traded.
The world of the wine investor is so far removed from the world of the
genuine wine lover that the two belong to different universes.

If you're thinking about doing the former, make sure you've got
something to drink, too. Four bottles that have excited me recently
are the raisiny, mature, multi-dimensional Taste the Difference 12-
Year-Old Pedro Ximénez (£7.19 per 50cl, 18%, Sainsbury's); the racy,
refreshing, subtly oaked 2005 Montsant Old Vines Garnacha (£8.99, 14%,
Marks & Spencer), which has to rate as one of Spain's greatest red-
wine bargains; the waxy, toasty, grapefruity, Semillon-based 2006
Château Le Chec, Graves (£9.75, 12.5%, Adnams, 01502 727 222); and,
last of all, the smooth, powerful, sun-drenched 2006 Benmarco Malbec,
Dominio del Plata, Mendoza (£11.99, or £8.99 each for two, 14%,
Majestic). These four wines won't make you rich, but I guarantee
you'll love drinking them.




- Tim Atkin. Guardian News. The Observer, Sunday 5 October 2008.